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GM is expected imminently to go bankrupt, and Chrysler’s sale to Fiat, S.p.A. is expected to go be concluded by the end of next week.

While in a perfect world, these companies wouldn’t need government handouts to stay afloat, this isn’t a perfect world, and it’s more desirable to bail them out than it is to throw hundreds of thousands of workers out on the street and let the companies fail. Because it’s not just GM or Chrysler. It’s also parts manufacturers, dealerships, and myriad other allied industries. When the spiral is going downward, you don’t hasten it.

The business model for GM has been an anachronism for decades, and this was

The German plate is no accident

inevitable. GM was too big, too heavily laden with legacy costs, building too many crap cars that could barely compete. This bankruptcy offers GM a chance to slough off unnecessary businesses and marques, and a chance to fundamentally restructure its operations to bring them up to 21st century standards.

GM’s automotive offerings have been improving quite starkly lately, and if they could make plants leaner, more flexible, and improve the speed with which new models come to market, they can actually begin to compete with the likes of foreign marques that seem somehow to be able to build good cars competitively in North America.

Chrysler is a different animal altogether. I just looked at Consumer Reports’ auto guide for 2009, and not one, single Chrysler vehicle is “recommended”. Not one. That’s just an epic failure from a car company that very recently was well-respected and innovative. The design of the Chrysler 300 became legendary, but the interiors remained cheap and the drivetrains remained unrefined. I don’t know why former master Daimler-Benz, which certainly knows better, let that happen, but Chrysler is literally to the point where it needs a complete overhaul of its entire line-up, and needs to return Jeep to its core competencies – Grand Cherokees and Wranglers. I’ve seen renderings and photos of Chrysler’s new auto interiors, and they’re a nice step up from what exists now, but probably a step behind where Honda or Toyota or Volkswagen.

Although Fiat has a bad reputation in the States because it generally sold crappy little cars that broke down a lot, in Europe that’s changed. While they still build the occasional quirky thing like the Multipla, their cars are innovative, well-designed, and well-built.

Chrysler filed for Chapter 11 protection yesterday, clearing the way for a new round of financing and a deal with Fiat. Concessions from unions were already taken care of, so there is a lot of hope right now that Chrysler can emerge from a fast-track bankruptcy in a much stronger way with a widened and improved stable of vehicles. It’s hoped that the guy who turned Fiat around from GM-subsidized basket case to Chrysler suitor can do wonders here, too.

Chrysler and GM both suffer from a malaise that’s all too familiar to us Buffalonians – a distinct inability and refusal to adapt with the changing times. American automakers didn’t just fail because they were slow to recognize changes in buyers’ tastes, or because their strategy was short-sighted, or because they built cars that were, for the most part, far inferior to their Japanese or European counterparts.

They suffer from a mid-50s mindset.

Hopefully, these concessions, the influx of cash, and relief from debt will prompt GM and Chrysler to fundamentally restructure and re-tool. It’s hard to compete with a state-of-the-art Hyundai, BMW, or Toyota plant when you’re operating a 50s era plant under 50s era work rules.